Cost accounting - I can't figure out #2 question

Customer Profitability Olin Company manufactures and distributes carpentry tools. Production of the tools is in the mature portion of the product life cycle. Olin has a sales force of 20. Salespeople are paid a commission of 7 percent of sales, plus expenses of $35 per day for days spent on the road away from home, plus $0.50 per mile. They deliver products in addition to making the sales, and each sales person is required to own a truck suitable for making deliveries. For the coming quarter, Olin estimates the following: $1,300,000 Sales Cost of goods sold 450,000 On average, a salesperson travels 6,000 miles per quarter and spends 38 days on the road. The fixed marketing and administrative expenses total $400,000 per quarter. Required: 1. Prepare an income statement for Olin Company for the next quarter. 1. Prepare an income statement for Olin Company for the next quarter. Olin Company Income Statement For the Coming Quarter Sales 1,300,000 Less: Cost of goods sold 450,000 Gross profit 850,000 Less: Variable marketing: Commissions 91,000 Mileage 60,000 Road time 26,600 Fixed marketing and administrative expenses 400,000 272,400 Operating income 2. Suppose that a large hardware chain, MegaHardware, Inc., wants Olin Company to produce its new SuperTool line. This would require Olin Company to sell 80 percent of total output to the chain. The tools will be imprinted with the SuperTool brand, requiring Olin to purchase new equipment, use somewhat different materials, and reconfigure the production line. Olin's industrial engineers estimate that cost of goods sold for the SuperTool line would increase by 15 percent. No sales commission would be incurred, and MegaHardware would link Olin to its EDI system. This would require an annual cost of $100,000 on the part of Olin MegaHardware would pay shipping. As a result, the sales force would shrink by 80 percent. Prepare a revised income statement for Olin Company for the next quarter. Olin Company Revised Income Statement For the Coming Quarter Sales 1,300,000 Less: Cost of goods sold -517,500X Gross profit 782,500X Less: Variable marketing: Commissions 104,000 X Mileage 12,000 Road time 5,320 Fixed marketing and administrative expenses 400,000 261,180 X Operating income